Saudi Aramco announced the official prices for selling shipments of Arab Light crude to its customers in Asia, Europe and the United States, during the coming month of May (2023).
The company decided to raise the official Saudi oil selling prices for Arab Light crude to Asia by 30 US cents to $2.80 per barrel, above the Oman/Dubai average, according to the pricing document seen by the specialized energy platform.
Saudi Aramco’s decision to raise prices comes after the additional cuts announced by countries in the OPEC + alliance, which will lead to tightening supply and put upward pressure on crude oil prices from the Middle East.
Traders surveyed by Bloomberg before the OPEC+ decision had expected the price of Arab Light crude to fall by 43 cents per barrel.
Aramco prices and Asian demand
Demand for medium crude in Asia is slowly moving upwards, and despite that, hope is still pinned on Chinese demand, which seems not to improve as hoped for soon, despite China lifting the strict restrictions it had imposed in the face of the Corona pandemic.
Saudi Aramco’s move to raise the official selling prices comes amid expectations of an increase in Chinese demand, especially with a shortage of supply in the oil markets during the coming month of May 2023, with the entry into force of the additional production cut of the OPEC + coalition countries.
Saudi Aramco raised the official selling prices for Arab Light crude to Asia during the current month of April by $0.50 per barrel to $2.5 per barrel above Oman/Dubai levels, according to information seen by the specialized energy platform.
Oil supply shortage forecast
Experts and officials in the United States, including the spokesman for the US National Security Council, John Kirby, believe that the move to reduce oil production by OPEC + countries would affect the supply in global markets, and would lead to an increase in oil prices.
Oil prices rose by 8.4% on Monday, the largest rise in more than a year, after 9 OPEC + countries, led by Saudi Arabia and Russia, announced voluntary cuts exceeding the level of 1.65 million barrels per day, starting next May. This measure, which these countries considered a “precautionary measure”, aims to support the stability of oil markets.
Traders and refiners had been anxiously awaiting the release of Saudi official prices since the beginning of this week, amid expectations of a hike in the official selling price, as some buyers were also concerned about possible cuts in their cargo transfers from Aramco, or so-called allotments, prompting them to start In talking with other non-OPEC+ suppliers to obtain alternative supplies.
Saudi Aramco can influence and control the total amount of oil it exports in a given month by setting its own official prices compared to other competing suppliers, or through an allocation process, deciding how much of each grade it will offer to each customer.
Aramco sells about 60% of its crude shipments to Asia, mostly under long-term contracts whose prices are reviewed monthly. China, Japan, South Korea and India are the biggest buyers.
It is noteworthy that Aramco’s official selling prices to the countries of Asia, Europe and the United States had fallen to their lowest level in 15 months, in February 2023, according to information seen by the specialized energy platform.
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